Austrian merger control – Supreme Court rules on ‘significant domestic activities’ requirement under the transaction value test

The Austrian Supreme Court in its Edwards Lifesciences/JenaValve decision dated 26 March 2025 (16 Ok 2/25t) examines under which circumstances the acquired target undertaking/business ‘is active’ in Austria ‘to a significant extent’. Only if this requirement is met, a merger notification under the so-called transaction value test pursuant to Section 9(4) of the Austrian Cartel Act (KartG) can be required.

The case stems from the contemplated acquisition of JenaValve Technology, Inc. (JenaValve) by Edwards Lifesciences Corp. (Edwards) and provides important guidance for assessing in which cases a high-value transaction of a target company with only very limited Austrian turnover may require an Austrian merger control notification.

Legal background

Pursuant to Section 9(1) KartG, a concentration shall be notified to the Austrian Federal Competition Authority (FCA and together with the Federal Cartel Prosecutor the Official Parties) prior to completion if the following turnover thresholds in the last financial year preceding the concentration are met by the concerned undertakings:

• The combined worldwide turnover of all undertakings concerned exceeded EUR 300 million;
• the combined Austrian turnover of all undertakings concerned exceeded EUR 30 million and at least two of the undertakings concerned each had a turnover of more than EUR 1 million in Austria; and
• the respective individual worldwide turnover of at least two of the undertakings concerned exceeded EUR 5 million.

In 2017, the Austrian Cartel and Competition Law Amendment Act 2017 (Kartell- und Wettbewerbsrechts-Änderungsgesetz 2017 – KaWeRÄG 2017) introduced an additional jurisdictional threshold to the Austrian merger control regime based on the value of consideration for the transaction (the so-called transaction value test/threshold). Pursuant to Section 9(4) KartG, concentrations that do not meet the turnover thresholds stipulated in 9(1) KartG need to be notified with the FCA if:

• the combined worldwide turnover of all the undertakings concerned exceeded EUR 300 million in the last financial year prior to the concentration;
• the combined Austrian turnover of all the undertakings concerned exceeded EUR 15 million in the last financial year prior to the concentration;
• the value of the consideration for the transaction exceeds EUR 200 million; and
• the target undertaking is active in Austria to a significant extent.

Facts of the case

On 12 September 2024, Edwards submitted a merger notification with the FCA regarding its contemplated acquisition of all the shares and sole control of JenaValve. This merger filing was made on a precautionary basis: While the transaction did not meet the turnover thresholds pursuant to Section 9(1) KartG, the first three criteria under the transaction value test (Section 9(4) No. 1–3 KartG) were met. However, JenaValve’s turnover in Austria was limited (EUR 57,000 in 2023; EUR 95,000 in 2024) and its Austrian sales were generated with only one customer (an Austrian hospital) which in total had acquired 8 TAVR-AR systems from JenaValve. Furthermore, JenaValve also did not have any subsidiaries, branches, business premises or R&D activities in Austria. Thus, it was questionable whether JenaValve met the requirement that the target undertaking ‘is active’ in Austria ‘to a significant extent’ pursuant to Section 9(4) No. 4 KartG.

As the Official Parties raised competition concerns with respect to the transaction, they requested an in-depth examination (phase II) of the concentration before the Austrian cartel court. However, the cartel court rejected the requests of the Official Parties as the transaction did not qualify as a notifiable concentration given that JenaValve was not considered to be active in Austria to a significant extent. The Official Parties lodged an appeal against the decision of the cartel court to the Austrian Supreme Court.

Supreme Court’s ruling

In its ruling, the Supreme Court rejected the appeals by the Official Parties and confirmed that the transaction did not require a notification under Austrian merger control rules. The decision provides valuable guidance when a target undertaking may be considered being ‘active in Austria to a significant extent’:

• Relevant time: The provision in Section 9(4) No. 4 KartG requires that the target undertaking ‘is’ active in Austria to a significant extent. Thus, only a current activity of the target undertaking at the time of the (contemplated) implementation of the concentration is relevant. A future activity of the target undertaking in Austria (even if such activity is already planned) is irrelevant.
• (Significant) domestic activity: Only market related activities are relevant when assessing the target undertaking’s domestic activities. The test focuses on the location of the customer. Thus, a business location of the target undertaking in Austria (a criteria indicating a significant domestic activity according to the legislative materials of the KaWeRÄG 2017) only is relevant if it qualifies as an operation where an economic activity is carried out also for Austrian customers (the ruling, however, leaves it open whether domestic R&D operations could also be sufficient). If the target undertaking does not have a market facing business operation in Austria, recognised metrics of the respective industry are relevant when determining whether a target undertaking has (significant) domestic activities (e.g., number of users; website access frequency). Thus, the target undertaking’s market share on the relevant market in Austria is not a decisive factor for assessing whether it is active in Austria ‘to a significant extent’ (the Supreme Court ruling on this aspect is contrary to an earlier cartel court decision in the Salesforce case [cartel court judgment dated 22 April 2021, 27 Kt 9/21g] which held that a significant domestic activity can be inferred from the target undertaking’s share of 5–10 % in a particular market segment). In the case at hand, the Supreme Court found that one existing customer in Austria is sufficient to find that the target undertaking has domestic activities. However, these domestic activities were not considered to be ‘significant’.
• Turnover as criteria for assessing the significance of domestic activities: For cases where only the target undertaking’s Austrian turnover forms the basis for assessing the significance of its Austrian activities, the Supreme Court held that a domestic activity cannot be considered ‘significant’ if the target undertaking’s Austrian turnover does not exceed EUR 1 million.

Conclusion

The Supreme Court’s ruling provides a valuable clarification when assessing whether a transaction requires an Austrian merger control filing based on the transaction value test. In (traditional) industries where turnover is still the relevant metric (and there are no other ‘plus’ factors), a target undertaking is only considered to be active in Austria to a significant extent if its annual turnover exceeds EUR 1 million.

For more information on this ruling and merger control in Austria, contact your CMS client partner or these CMS experts.